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Buhari Seeks $5.85b in China Loans for Rail Network

Nigerian President Muhammadu Buhari is seeking approval from parliament for a proposal to borrow $5.85 billion from China to modernise the country's rail network.

Growth in Nigeria - an OPEC member whose economy, the largest in Africa, has been hammered by low oil prices - has been stunted for decades by a lack of investment in the road and rail network.

Buhari urged parliament in a letter to approve the borrowing because China has a limit on the funds available to African countries from its China Africa Fund. The president wants to sign loan agreements as soon as China approves the project.

"These loans form part of the overall money for the rail strategy," Buhari said in the letter. The loans are part of the government's 2016-2018 foreign borrowing plan, he said.

Nigeria is in its second year of recession, brought on by low oil prices, which have slashed government revenues, weakened the naira currency and caused chronic dollar shortages. The government aims to boost infrastructure spending to help recover from the recession.

China Exim bank has approved $1.231 billion loan to modernise the rail network linking the commercial hub of Lagos in the south to the industrial city of Kano in the north and also Lagos to Ibadan segment, the letter read.

"We fully intend to source further concession funding to ultimately upgrade this critical line to high speed standard gauge," the letter said. "These projects form the overall plan to resuscitate the rail transport across the nation."

Buhari said the Chinese government has told him approval of the Lagos-Kaduna railway modernisation project and Lagos-Calabar, a coastal railway project, were imminent.